2006 Issue 6

Does the 1984 Common Interest Ownership Act Govern Your Pre-1984 Condo Association?
The Answer is Almost Always Yes, At Least in Part

by Adam J. Cohen, Esq.

Many condominium officers and management companies are surprised to learn that the Common Interest Ownership Act applies retrospectively in several important ways to communities created long before its own 1984 effective date.  Understanding this is crucial to determining which laws apply when issues arise concerning the board’s administrative powers, recordkeeping requirements, dues enforcement procedures, and in nearly everything else the association does.  Older condos which assume they have blanket immunity from the newer statute’s directives – or who neglect to comply with prior laws easily forgotten under the more widespread modern practices – can find themselves in very hot water.

Connecticut adopted the Common Interest Ownership Act (“CIOA”) to update and expand state laws governing communities in which the owners share property responsibilities.  These typically include condominiums, where every owner owns a fraction of the common areas in addition to his or her own unit; planned communities in which common areas are owned by a corporate entity of which each unit owner is a member; and cooperatives, where the residents are merely members of such a corporate entity which owns not just the common areas but also the units themselves.  By 1984, it was clear that existing laws were not comprehensive or flexible enough to handle this booming segment of the residential industry.  
  
Based on a model law proposed for states throughout the nation, CIOA was Connecticut’s third effort to regulate these types of communities.  The second effort, the Condominium Act of 1976, was more limited and had resulted in the complete repeal of the first effort, the Unit Ownership Act of 1963.  But reluctant to change the ground rules under which hundreds of communities were already operating by 1984, Connecticut lawmakers instead chose to leave the Condominium Act on the books when they adopted CIOA.  Instead, they left complicated instructions on how to tell which of the two laws would apply depending on the type of community and the situation it faced.

CIOA always applies to communities which were created on or after January 1, 1984, except for a few specialized, nonresidential, or conversion communities in very limited circumstances.  Otherwise, the Condominium Act never applies to these newer communities in any way.  CIOA also applies to nonresidential and pre-1984 communities to the extent they may choose to “opt in” by amending their founding documents to explicitly say so.  Still, they cannot adopt the “rights, powers or privileges” CIOA offers without its “correlative obligations, liabilities and restrictions” – in other words, they must take the law’s burdens with its benefits.
CIOA goes on to say that several of its provisions, which it specifically lists out, also apply to communities created before January 1, 1984, again with narrow exceptions for those which are nonresidential, were created by special legislation, or have fewer than twelve units and no development rights.  The most important of these provisions deal with the powers of the association’s board (including to sign contracts, hire and fire employees, enact and enforce rules, and so on); what records the association must keep and its obligation to provide a resale certificate to new unit purchasers upon request; how to collect unpaid dues and fines through liens and lawsuits; and the procedures for amending the declaration.  Other provisions of CIOA which also apply to older communities cover issues including:

Although these provisions generally apply to communities no matter when there were created, CIOA imposes two important prerequisites to their retrospective application: they “apply only with respect to events and circumstances occurring after January 1, 1984, and do not invalidate existing provisions of the declaration, bylaws or surveys or plans of those common interest communities.”

These rules for determining CIOA’s applicability most often become an issue when an older condominium tries to collect unpaid dues or fines from a unit owner.  Under the Condominium Act of 1976, unpaid dues (but not fines) could be collected by filing a paper lien in the town land records, giving a copy to the unit owner, and filing a foreclosure lawsuit within one year.  The lien trumped all other encumbrances except taxes and mortgages.  CIOA changed this in 1984 to make the liens “inchoate” (that is, no paper lien had to be recorded), to double the foreclosure deadline to two years, to give six months’ worth of priority over first and second mortgages, and to allow both dues and fines to be collected in this manner. Condominium boards suddenly had to decide which of these two very different procedures to follow.

Connecticut courts have since agreed that CIOA’s rules govern liens for dues assessed after 1984 no matter how old the condominium itself may be, since these dues are “events and circumstances” which do not predate CIOA – and thus satisfy its retrospectivity prerequisite.  Therefore, older communities should not record paper liens, can wait longer to foreclose, and enjoy limited priority over mortgages when collecting post-1984 dues.  But one court has ruled that applying CIOA’s two-year foreclosure deadline to a pre-1984 condominium whose declaration said the lien lasted longer would “invalidate existing provisions of the declaration.”  Since this would violate the law’s other retrospectivity prerequisite, the court did not hold the condominium to that standard.   In other words, an older condo can be “grandfathered” into the Condominium Act if its declaration explicitly contradicts CIOA’s provisions. 

Communities created before 1984 are not governed by CIOA’s default rules delineating unit boundaries, the rights of mortgagees, association meeting procedures, the contents of the bylaws, and the other provisions which CIOA does not list as applying to these older communities.  This too can be a trap for the unwary.  For example, an amendment to the bylaws of an older condominium would be unenforceable unless recorded in the town’s land records according to the Condominium Act, but the same amendment would be perfectly valid if the condominium had “opted in” to CIOA, which has no such recording requirement.   Since so many communities are newer and therefore need not do so, boards and management companies might easily forget to comply with the recording requirement for older condominiums, leaving their bylaw amendments unenforceable.

The moral is that a community can never assume that only the Condominium Act governs its affairs simply because it was created before 1984.  Instead, the board or management company must very closely examine its declaration, bylaws, and other founding documents on a case-by-case basis and compare them to the complex statutory directives for determining which law will govern a particular situation.  The Condominium Act or other prior law will generally only apply if it is invoked in the founding documents by name, if those documents are specifically inconsistent with CIOA on the issue, or if the issue is not addressed in the statutory sections CIOA enumerates as superseding the older law.  Otherwise, CIOA will almost always govern.  Every community and management company should therefore work closely with its attorneys to make sure it is following the right law for everything it does and every issue it faces.  

Adam J. Cohen is an attorney with the Law Firm of Pullman & Comley, LLC headquartered in Bridgeport, Connecticut.  He represents and gives seminars to condominiums, tax districts, and other communities in matters ranging from revenue collection strategies to commercial disputes, and is the author of regular newsletters with circulations throughout Connecticut called Special District Update and Condominium Update.